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Company Formation in The Czech Republic
Company Formation in The Czech Republic
Czech Republic
www.accace.com
www.accace.cz
Contents
Legal forms of business, minimum capital, contribution 3
General Partnership (Veřejná obchodní společnost | v.o.s.) 3
Limited Partnership (Komanditní společnost | k.s.) 3
Limited Liability Company (Společnost s ručením omezeným | s.r.o.) 3
Joint Stock Company (Akciová společnost | a.s.) 4
Cooperative (Družstvo) 4
Organizational Branch of a foreign company (Organizační složka) 4
Other forms of business 4
Minimum documentation and incorporation time 5
Shareholders and company´s bodies 6
Common setups 6
Special requirements 6
General overview of corporate taxes 7
Formation fees 8
Investment incentives 9
Other aspects 10
Liability for damages caused by the statutory bodies 10
ABOUT ACCACE 11
The minimum contribution of the limited partner should be set in the Articles of Association. Again,
there is no requirement of a minimum registered capital.
According to the Business Corporations Act, the minimum contribution of each shareholder is in the
amount of CZK 1. The minimum registered capital is not set in the legislation, so it is derived from the
amount of minimum contribution of a shareholder (for a Limited Liability Company with one
shareholder the minimum registered capital is CZK 1).
A Limited Liability Company is liable for the breach of its obligations with all its assets, while
shareholders guarantee for the breach of the obligations of the Limited Liability Company only up to
their committed but unpaid contributions to the registered capital registered with the Commercial
Register.
Cooperative (Družstvo)
The purpose of a Cooperative is to undertake business activities or to ensure the economic and social
or other benefits of its members.
A Cooperative is a community of an indefinite number of persons but it shall have at least 3 members.
The Business Corporations Act does not set out the amount of minimum registered capital or
minimum contribution.
The most important document required when establishing a company in the Czech Republic is the
Articles of Association / Foundation Deed. When the establishing company is a capital company
(Limited Liability Company or Joint Stock Company) the document must be made in the form of
notarial deed.
Other documents required are subject to circumstances. Usually the following documents are also
required:
Incorporation time varies based on company type. For example: the establishment of a capital
company could be finished in 10 working days, while the establishment of a partnership is generally
less time consuming and it could be completed in 5 working days.
Common setups
In the following table we present an overview of possible setups of shareholders and other company’s
bodies in the most used legal forms of business:
Special requirements
Foreigners who will form the statutory body have to prove their moral integrity by obtaining and
submitting the criminal background check from the state of citizenship or long - term residency.
If the shareholder should be a legal person, the proof of its existence (excerpt from commercial
register) shall be required.
Both corporate tax residents and tax non-residents are subject to Czech corporate income taxes.
A corporation is a tax resident if it is incorporated or managed and controlled in the Czech Republic.
Tax residents are taxed on their worldwide income while tax non-residents only on the Czech-source
income.
The taxable income is calculated on the basis of the accounting profits. As a general rule, expenses
incurred on obtaining, ensuring and maintaining the taxable income are fully tax deductible, unless
they are listed as
tax non-deductible items.
Corporate income tax is levied at a general (standard) rate of 19%. Moreover, lowered corporate
income tax rate of 5% applies to basic investment funds while pension funds are subject to
a corporate income tax rate of 0%.
The tax period may be a calendar year or a fiscal year. The taxpayer has the obligation to calculate
the tax due in the corporate income tax return (self-assessment). The time-limit is thee or six months
depending on certain conditions.
Advance tax payments are paid semi-annually or quarterly depending on the amount of the last
known tax liability.
In the following table we provide an overview of the typical costs associated with the company
formation in the Czech Republic, for the most used legal forms of business:
Typical
establishment CZK 8,000 CZK 21,000 CZK 3,000 CZK 3,000
costs *
* notary fees, court fees, trade register fees
Czech and foreign legal entities, as well as natural persons engaged in business activities in the
Czech Republic, can apply for investment incentives. The supported areas include: manufacturing
industry, technology centres (R&D) and business support services centres.
When meeting the conditions, investment incentives can be provided in the form of:
Unfortunately, the liability could not be limited in any way (for example by an agreement with
a company etc.).
In order to protect the statutory bodies, insurance companies in the Czech Republic provide
a commercial insurance option, meant to insure against damages caused by the decisions of statutory
bodies.
Disclaimer
Please note that our materials have been prepared for general guidance on the matter and it does not
represent a customized professional advice. Furthermore, because the legislation is changing
continuously, some of the information may have been modified after the material has been released and
Accace does not take any responsibility and is not liable for any potential risks or damages caused by
taking actions based on the information provided herein.
Accace offices are located in the Czech Republic, Hungary, Poland, Romania,
Slovakia, Ukraine, Bosnia and Herzegovina, Croatia, Germany, Macedonia,
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